Key Takeaways

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• Majors continue to hold their ground in range bound trading
• Multiple alt-coins dropped by 10 to 15%, extending BTC dominance by 1%
• Crypto traders continue to watch other markets with growing trepidation, especially key support levels in major equity benchmarks
• Vol compressed again, while put skew retains a strong bid

Looking back

Over the past week in crypto, majors BTC and ETH have held their ground in relatively tight ranges, while most other coins have sold off significantly, and BTC dominance rose from 41.75% to 42.75% as a result.  Most coins lurched to the left early Sunday morning in Asia, to complete a poor week.  

Over the week, the poorer performers were UNI, MATIC, DOT, AVAX, and LINK, all down around 13-18%.  APE outperformed in the run up to the BAYC auction over the weekend, trading from $17 to $27, but has since dropped back to be unchanged from last Monday.  Gas prices in the ETH network also spiked over the auction, leading to a delay in settlement and a significant amount of wasted gas fees for some trying to participate in the BAYC auction. DOG also had a good rally as Musk was confirmed as the new owner of Twitter, but has also given up all mid-week gains to trade unchanged on the week around $0.1325.

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In the dearth of crypto-specific news, and in fear of the recent high correlation between equity and crypto markets, crypto traders have been watching equities for direction. Tech stocks continued to stumble last week, with the Nasdaq dropping another 4% to finish the month of April down 13.5%.   Major equity indices are sitting on important technical support levels, around 4100 in S&P and 12,500 in Nasdaq.  

Our flows this past week have been mainly biased to the buy side.  Regionally, the better buyers were APAC and EMEA accounts, with Americas more balanced; by client type our standout buyers were crypto exchanges, supported by family offices and funds.  By coin, we saw flows weighted 55%+ to the buy side in XRP, SHB, ADA, LUNA, LINK, XLM, XTZ, and UNI; and we only saw 55%+ selling in DOT.  In the majors, we saw a strong preference in flows to buy BTC (53.1%) over ETH (48.1%).  

The lend-borrow market remains sluggish with little interest to borrow stablecoins.  We continue to see interest to borrow certain alts, however, as perps basis in most alts remains negative, making it rather expensive to carry shorts.  Futures basis is marginally higher on the week, though not significantly so.  

In options, atm vols continue to be pressured by supply, mainly of call options from DoV auctions.  As a result, mid-curve and back end vols are down 1-2 vols from a week ago, and are now at or very close to 3 year lows, with Sep BTC at 60.0 and Sep ETH at 69.0: crypto vols are really the outlier in the macro space now, as vols are rather elevated in FX, rates, equities, and commodities.  Risk reversals are better bid again for puts (25delta r/r for BTC and ETH at 7.0 and 9.0 respectively) reflecting both the oversupply of call side vol, and the general macro concern that further USD strength will correlate with higher generalised volatility.

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Looking ahead

This will be an important week for macro, with the Fed, BoE, and RBA all announcing rate decisions, meaning this could be the calm before the storm right now.  Additionally on Friday we have US non-farm payrolls from April, where a big number could be interpreted as enabling Powell to hike more aggressively this year. , One of those ‘good could be construed as bad’ scenarios, and vice versa.

Dependance on equities looks elevated this week and traders will be watching support at 4,100 in S&P and 12,500 in Nasdaq.  If those levels break, then expect weakness in crypto, and watch for a shift in vol regime if we do start to break.  Technical support lines in crypto are at $37k in BTC and $2700 in ETH.

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About B2C2

B2C2 is the crypto-native liquidity provider across market conditions.  450+ institutions globally, including agency OTC desks, aggregators, banks, exchanges, FX brokers and hedge funds, rely on B2C2’s full service offering for 24/7 access to the crypto market.

Since it was founded in 2015, B2C2 built its technology, products and services to meet the evolving needs of diverse institutions.  Continuously innovative, B2C2 is trusted by clients to find solutions to industry challenges, such as creating the first crypto ISDA Master Agreement in 2018.

Acquired by Japanese financial group SBI in 2020, B2C2 remains a standalone company, headquartered in the UK, with offices in the US and Japan.  B2C2 OTC Ltd. is authorised and regulated by the UK’s Financial Conduct Authority (FRN 810834).  For more information, please visit https://www.b2c2.com

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